Are You Ready for the Super-Sized Super Competitor?

Exploring a Future World

This is the first of a series of articles that will help you to explore an uncertain future world.

We all need to explore a range of potential futures.

This applies whether we are a large corporation or an individual. We all need a thought out view of the range of futures that we could face. This gives a business corporation a platform to develop strategic options and the strategic resources it needs to face uncertainty. But, as I have said, the process isn’t just for business corporations. It’s really helpful for individuals too as the process of thinking about a range of potential futures is, in my view and personal experience, vitally important as it will help you to define the portfolio of skills and experiences that you will need to excel in an uncertain world.

Each article in this series poses a question for you to explore, either alone if you’re thinking about personal development, or with your team in a work context. These questions will explore a range of issues from market structure through to the future of globalization. There are no right or wrong answers to the questions. The real value comes from exploring the questions and developing answers. To look for all articles in this series just search for the category ‘Future Questions’ in the sidebar.

Our first question is:

Are you ready for the super-sized super competitors?

Super Competitors: A Strategic Shift?

New research warns us of a potential major shift in the strategic landscape of many markets and industries. This shift takes the form of the potential emergence of ‘Super-Sized Super Competitors’.

The idea comes from two main observations.

The first observation is that market entry rates are declining and that many new firms are more amenable to being acquired at an early stage by larger established organisations. The second observation is that measures of market concentration are increasing, in other words, the market shares held by individual organisations are increasing.

These two observations could indicate that we are starting to see the emergence of a new type of competitor, the ‘super-sized super-competitor’.

The challenge presented by super-sized super-competitors is that they have the potential to develop and hold resources that will enable them to out-innovate traditional competitors. Importantly, this means that super-sized super-competitors could have the capability develop their own innovation ‘ecosystems’ that would be increasingly hard for other players and new entrants to emulate. One of the many outputs of these innovation ecosystems could include the generation of a raft of process innovations that make the super-sized super-competitors increasingly efficient and productive. In strategic terms, they could be able to innovate and deliver new offerings from a far lower cost base than established competitors.

This is very much like the resource-based theory of the firm which tells us that the real enduring source of competitive advantage is the possession of a set of unique and strategically relevant resources or capabilities. The threat posed is therefore significant, super-sized super-competitors could have the capability to develop a strategic resource pool that is beyond the reach of traditional competitors.

There are some other emerging challenges that super-sized super-competitors could present us with. These include:

(a) ‘Free Products’: Super-sized super-competitors could follow the business model of current technology leaders and offer some products for free – especially if they develop platforms with very low or even zero incremental costs.

(b) Pan-Industry Entry: Super-sized super-competitors having access to customer data that traditional competitors don’t. Access to this data and the ability to analyse this information may also allow super-sized super-competitors to puncture traditional industry boundaries and operate on a pan-industry basis. This is a worrying feature for many established players. Could the data gathering and analytical powers possessed by super-sized super competitors allow these entities to apply disruptive innovation across markets and industries?

(d) Strategic Asset Destruction: We could call this the ‘Amazon Effect’, the best example of which is turning an expensive but traditionally valuable strategic asset in the retail sector – prime real estate – into costly strategic liabilities.

It’s quite plausible to imagine too, if globalization continues to stutter, that we will will see the emergence of state-backed super-sized super-competitors as well.

However, it would be wrong to think that super-sized super-competitors will have it all their own way. There any many potential obstacles including:

(i) The perils of growth and maturity. Growth, age and size of an organisation all bring big problems

(ii) Regulation

(iii) Attitudes in society to larger corporations

(iv) The argument that super-sized super-competitors could result in increasing inequality.

A Starting Point …

To conclude, if you’re interested in building a resilient organisation or looking at the future of the world of work in terms of your own career, then the potential emergence of super-sized super-competitors is a subject that must be on the agenda.

A good place to start thinking strategically about the impact of these new competitors might be to try to answer these questions:

If you’re working for a corporate and interested in strategy try: ‘Could super-sized super competitors’ customer data gathering and analytical power allow them to invade your market?’ and ‘What would it take, in terms of capabilities, for us to become a super-sized super competitor?’

If you’re an individual thinking about your career and the impact of these new competitors try: ‘What competences (think beyond just analytical) will they need?’

These are tough issues to confront, but as I always say, if you focus on the tough issues that others shy away from, you’ll be surprised at the new ideas you can create!